What’s Wrong with Reducing Cost and Increasing Efficiency?
by Martyn Hart, NOA Chairman
Thursday, April 07, 2011
In recent weeks, we’ve seen a number of initiatives from the government aimed at making it easier for organisations in the private sector looking to supply services to the public sector.
Indeed, by pledging to support growth in enterprise, and by trying its best to clear the path for private sector organisations looking to take on public sector contracts, it seems clear that the coalition has nailed its colours firmly to the outsourcing mast. But who stands to benefit?
The latest of these new initiatives came from Communities Secretary Eric Pickles who has, in recent weeks, signalled the government’s intention to scrap the ‘Two Tier’ outsourcing code for local government.
The code, which was introduced by the Labour Government in 2003, was aimed at preventing the creation of two-tier workforces by protecting employees recruited to work on outsourced public sector contracts from being appointed at lesser rates in comparison to transferred employees.
In truth, news of the code’s imminent abolition comes as no real surprise to anyone, as the government’s austerity measures have dictated that the tendering for public sector must focus increasingly on cost efficiencies and quality of service, without having to worry about other considerations. It does, however, demonstrate that public sector outsourcing is on the rise.
With this in mind, perhaps the real beneficiaries of the government’s commitment to outsourcing will be outsourcing industry itself? Of course, it’s fashionable, in the present climate, to suggest, in the way Channel 4’s Dispatches has done in recent weeks, that suppliers will be rubbing their hands at the prospect of increased profits.
However, it’s nonetheless true that the outsourcing industry is buoyant at the moment, not because they are greedy fat cats, but because outsourcing is one of the few industries capable of relieving the burden to the taxpayer, by reducing costs and increasing efficiencies.
It’s also true that as the outsourcing landscape becomes more open in the wake of the government’s commitment to promoting enterprise, more and more suppliers will look for ways they can get a slice of the growing outsourcing pie, thus bringing more competition, effectiveness and innovation into the public sector. Which has to be good!
Thus, it’s no coincidence that the NOA has seen a marked increase in activity in recent months, with new members joining from local government telling us that they have been encouraged by the innovative approach suppliers are offering to this sector.
But if outsourcing really is the way forward for the public sector, then surely it’s in the best interests of everyone concerned to make sure they know how to manage an outsourcing relationship effectively?
A successful outsourcing relationship is something you need to work at and understand, and there is a risk that without a guide, public sector organisations will stumble down this road blindly. So it was no surprise to me to learn that NOA Pathway - the NOA’s training arm - has also seen an increase in interest from local government in recent weeks. Most of these have been in touch with a view to helping them understand best practice in outsourcing and to ensure that they get best value from their suppliers.
Given that outsourcing in the public sector is on the rise, as a result of the government’s recent initiatives, perhaps the question we should be asking is whether it’s time more organisations in the public sector looked at training and of course Pathway.